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Credit Ratings and Credit Cards

Credit ratings or credit scores are the records of a person's spending pattern regarding credit cards and repayment modes. Financial institutions, especially credit card companies, and moneylenders keep track of the credit statements of clients, their payment records, and any delay/inability of repayment and the interests being paid due to late repayment of the credit.

Ways To Boost Your Credit Rating

Credit cards being a source of ratings, it becomes necessary not only to use your credit card regularly but also using it diligently. Once you have chosen the right kind of credit card with a suitable limit and interest rates, you need to start using your credit card for small and regular transactions, which you can repay easily at the end of the month. Regular transaction is important because every transaction shows on your credit report. You need to have less, probably one account only because it qualifies you for a bonus while availing the credit or financing your home or car.

Using your credit card once a year or foregoing subsequent repayment and settling the balance at the end of the year might not stand you in a good light in terms of credit ratings, as your credit report takes into account the last three years' payment history. Any discrepancies on the part of the credit card company in issuing your statement or bill it should be brought to their notice immediately, since it may result in the delay of payment or bad credit. A credit card could be used for monthly payments of bills, which would take care of the regularity of use, and smaller transactions can help in maintaining the required credit rating. Also regular and small transactions may help you increase your credit limit, which in turn accounts for a higher credit rating in the credit report.

Regular checking of your own credit report keeps you abreast with what to expect. Not exceeding the credit limit and keeping the balances low would help you in getting good credit ratings. Most important of all, it is better to repay the due amount before the due date to get a better credit rating.

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